3rd Quarter Trading Update

Cookson Group PLC
04 November 2005

4 November 2005



COOKSON GROUP plc - THIRD QUARTER 2005 TRADING UPDATE


Third Quarter Highlights

  • Revenue up 1% (down 2% at constant exchange rates)
  • Trading profit up 16% (up 11% at constant exchange rates)
  • Return on sales increases by 0.9 points to 8.1%
  • 24% increase in headline profit before tax
  • Strong trading profit growth in Ceramics and Electronics divisions
  • Precious Metals division maintained its profitability despite
    difficult markets
  • Net debt £40m lower than 30 September 2004



Trading profit and headline profit before tax are stated before rationalisation
costs, amortisation of intangible assets, profit/(loss) relating to fixed assets
and disposal of operations, income from swap close-out and the write-off of
prepaid debt-raising fees.



Commenting on the third quarter, Nick Salmon, Cookson's Chief Executive, said:



'The improving profitability produced in the third quarter and year to date
highlights the solid progress we are achieving in implementing the strategic
plan announced in January.



With both our Electronics and Ceramics divisions under new leadership, continued
cost reduction across the Group, and a focus on newer technology products, we
are making significant progress towards the divisional margin targets announced
at the start of the year.



Given the market conditions we are experiencing, we continue to expect that
overall performance for the full year will be slightly better than that achieved
in 2004.'



Group - Trading results

                                      Third quarter                           Change
                                   2005         2004           Reported exchange   Constant exchange
                                                                     rates               rates

Revenue (£m)                         411           408                     +1%                 -2%
Trading profit (£m)                   33            29                    +16%                +11%
Return on sales (%)                  8.1           7.1             +1.0 points         +0.9 points



Group revenue in the third quarter was marginally down on the same quarter last
year at constant exchange rates.  Both the Ceramics and Electronics divisions
reported broadly flat revenue whilst the Precious Metals division's revenue was
down 7%.



However, once both the revenue of the brick-making businesses disposed of in
December 2004 and the impact of lower tin prices in the Assembly Materials
sector are excluded, revenue for the Group increased by 1%.  Trading profit in
the third quarter was up by 11% (on a constant exchange rate basis) reflecting
the beneficial impact of cost reduction initiatives and increasing sales of
newer technology, higher margin products.  Significant progress has been made
towards the divisional margin targets announced at the Group's strategic review
in January 2005, with the return on sales in the third quarter increasing by
nearly one percentage point to 8.1%.


                                       Year to date                             Change
                                    2005          2004           Reported exchange  Constant exchange
                                                                       rates              rates

Revenue (£m)                         1,206         1,225                     -2%                -2%
Trading profit (£m)                     88            81                     +9%                +7%
Return on sales (%)                    7.3           6.6             +0.7 points        +0.7 points



Revenue for the nine month period to 30 September 2005 was £1,206m, down 2%
compared to the equivalent nine month period last year both at constant and
reported exchange rates.  Once both the revenue of the brick-making businesses
disposed of in December 2004 and the impact of lower tin prices in the Assembly
Materials sector are excluded, revenue for the Group for the nine months was in
line with the equivalent period last year.  This reflected growth in both the
Ceramics and Electronics divisions, offset by a 17% decrease in the Precious
Metals division (at constant exchange rates).  Trading profit year to date was
£88m, an increase of 9% at reported exchange rates and 7% at constant exchange
rates.  Return on sales year to date was 7.3% compared to 6.6% in the equivalent
period last year.





Ceramics division
                                       Third quarter                            Change
                                    2005          2004           Reported exchange    Constant exchange
                                                                       rates              rates  

Revenue (£m)                           188           185                     +2%                -2%
Trading profit (£m)                     18            16                    +13%                +9%
Return on sales (%)                    9.7           8.7             +1.0 points        +0.8 points



Revenue for the Ceramics division was marginally down on the same quarter last
year at constant exchange rates.  Once the revenue of the brick-making
businesses disposed of in December 2004 is excluded, revenue for the division
increased by 3%.  In the third quarter, steel production fell by 10% and 9%
respectively in the division's main markets of NAFTA and Europe.  In China - the
world's largest steel producing country and where the division has a strong
presence - output grew by 26%.  Overall, worldwide steel production grew by 4%.
At the time of the Group's interim results, it was noted that the strong growth
in global steel production experienced in the first half was expected to
moderate in the third quarter as global inventories corrected. Whilst there have
been some cut-backs in steel production in the third quarter, notably in NAFTA
and Europe, the extent of these reductions has been less marked than expected
with a number of these production cut-backs likely to be deferred into the
fourth quarter.  As a result of these deferrals, the fourth quarter is expected
to be weaker than both the third quarter of this year and the equivalent quarter
of last year.  Whilst there is limited visibility beyond this point, growth in
global steel production is expected to continue in 2006.




Trading profit for the Ceramics division increased by 9% at constant exchange
rates, reflecting not only the recent investment in new production capacity in
emerging economies (such as China, Brazil and Poland), but also the
restructuring of facilities and disposals in the more mature markets of the
United States and Europe.  The return on sales for the division increased from
8.7% to 9.7% representing solid progress towards the 10% margin target outlined
in the January 2005 strategic review.




Electronics division

                                       Third quarter                            Change
                                     2005          2004         Reported exchange   Constant exchange
                                                                      rates               rates

Revenue (£m)                            163          159                    +3%                   -
Trading profit (£m)                      16           13                   +19%                +15%
Return on sales (%)                     9.6          8.3            +1.3 points         +1.2 points



Revenue in the Electronics division reflected strong growth in Asia-Pacific
offset by weaker markets, both electronic and industrial, in the United States
and Europe.  Profitability has increased in all three of the sectors, driven
both by the success of new, higher margin products and also the beneficial
impact of cost-saving initiatives.  This resulted in a 15% growth in trading
profit for the division as a whole.  The return on sales has grown by over one
percentage point to 9.6%, just under the 10% margin target for this division
outlined in the January 2005 strategic review.



Assembly Materials

                                       Third quarter                            Change
                                     2005          2004          Reported exchange  Constant exchange
                                                                       rates              rates

Revenue (£m)                             77           73                     +6%                +3%
Trading profit (£m)                       8            6                    +30%               +26%
Return on sales (%)                    10.2          8.4             +1.8 points        +1.9 points



Revenue for the sector at £77m was up by 3% at constant exchange rates.
However, underlying revenue growth was approximately 9% taking into account the
negative impact of lower tin prices passed onto customers.  This increase
reflects strong growth in Asia-Pacific more than offsetting declines in the
United States and Europe.  The transition to lead-free technology also gathered
significant momentum during the quarter with approximately 26% of all solder
revenue now being lead-free compared to 8% in the third quarter of last year.
Trading profit increased by 26% at constant exchange rates reflecting the impact
of lead-free solder products.  The return on sales was 10.2%, a near two
percentage point increase compared to the third quarter of last year.



Chemistry

                                      Third quarter                           Change
                                   2005         2004          Reported exchange   Constant exchange
                                                                    rates               rates

Revenue (£m)                          53            53                      -                  -2%
Trading profit (£m)                    7             7                    +6%                  +2%
Return on sales (%)                 13.2          12.4            +0.8 points          +0.5 points



At £53m, the sector's revenue was marginally down on the third quarter of last
year at constant exchange rates reflecting difficult electronic and industrial
markets in the United States and Europe.  This weakness was largely offset by
strong growth in Asia-Pacific combined with strong demand for the sector's
market-leading copper damascene product used in the microelectronic industry.
Trading profit increased marginally giving a return on sales of 13.2%, an
increase of half a percentage point.



Laminates

                                      Third quarter                           Growth
                                   2005         2004           Reported exchange   Constant exchange
                                                                     rates               rates

Revenue (£m)                          33            33                     -1%                 -3%
Trading profit (£m)                    1             -                    +60%                +75%
Return on sales (%)                  2.4           1.5             +0.9 points         +1.0 points



Third quarter revenue of £33m was 3% lower than the same quarter last year at
constant exchange rates.  The migration of printed circuit board fabrication to
Asia-Pacific continues with revenue for the sector's businesses in the United
States and Europe declining slightly more than the growth in Asia-Pacific.
Volumes of higher margin products, such as GETEK(TM) and other high temperature/
reliability laminates were encouraging.



Following a trading loss of £2.2m in the first half of this year, the sector has
returned to profitability in the third quarter, reflecting both increased sales
of higher margin products and the benefit of the cost-reduction programme in
Europe starting to be reflected in the results.  Production was streamlined in
Sweden in the second quarter and, following the reduction of laminates capacity
in Germany in the first half of the year, in August the complete closure of the
German facility was announced.  This will take full effect in the fourth
quarter.  Given the recent stabilisation in overall sales, the improved market
penetration of higher margin products and the beneficial impact of the German
facility closure, this improved performance should be maintained.




Precious Metals division

                                     Third quarter                            Change
                                  2005        2004            Reported  exchange    Constant exchange
                                                                     rates                rates

Revenue (£m)                        60            64                         -7%
                                                                                                -7%
Net sales value (£m)                25            27                         -8%
                                                                                                -9%
Trading profit (£m)                  2             2                        -11%               -15%
Return on net sales value (%)      6.5           6.7                 -0.2 points        -0.5 points




Revenue of £60m in the Precious Metals division was down 7% at constant exchange
rates and, after excluding the precious metals content, net sales value was also
down 9% at constant exchange rates.  This reflected the depressed retail
environment for precious metal jewellery products in all of the division's key
markets, particularly in the United Kingdom.  Despite very difficult market
conditions, the division has remained profitable due to the cost saving
initiatives enacted over the last year.  These included headcount reductions in
the United States and the complete restructuring of operations in France.




Group - Headline* and Reported results


£m unless stated otherwise               Third quarter                      Year to date
                                         2005      2004     Change          2005      2004       Change
Headline* results:
Trading profit                             33       29        +16%            88        81          +9%
Interest                                  (7)      (7)         -3%          (22)      (24)          -6%
Share of post-tax profits of JV's           1        -                         1         2
Profit before tax                          27       22        +24%            67        59         +13%
Tax                                       (8)      (6)                      (20)      (17)
Profit after tax                           19       16        +19%            47        42         +12%
Earnings per share (pence)                10p       8p        +25%           24p       20p         +17%
Reported results:
Profit before tax - Headline               27       22        +24%            67        59         +13%
Rationalisation of operating              (4)      (1)                      (12)      (12)
activities
Other items (net)**                       (1)        -                         1       (2)
Profit before tax - Reported               22       21         +5%            56        45         +24%
Earnings per share (pence)                 7p       7p         -4%           15p       12p         +31%



* before rationalisation costs, amortisation of  intangible assets, profit/
(loss) relating to fixed assets and disposal of operations, income from swap
close-out and the write-off of prepaid debt-raising fees.



** other items (net) included amortisation of intangible assets, profit/(loss)
relating to fixed assets and disposal of operations, income from swap close-out
and the write-off of prepaid debt-raising fees.



Headline profit before tax for the third quarter increased 24% to £27m
reflecting a 16% increase in trading profits and a 3% reduction in the interest
charge. The effective tax rate was 30%, in line with the anticipated rate for
the full year included in the first half results.  Headline earnings per share
of 10 pence were 25% higher than the third quarter of last year.



Profit before tax on a reported basis of £22m reflects rationalisation charges
of £4m in the third quarter which related primarily to the restructuring of the
Laminates sector's European operations in Sweden and Germany and the closure of
the Ceramics division's facility in Oleggio, Italy.  Charges for rationalisation
for the year to date totalled £12m (2004: £12m).

Profit before tax for the year to date, as reported, of £56m is after a profit
relating to fixed assets of £1m (2004: £1m), interest income from swap close-out
of nil (2004: £3m) and the write-off of prepaid debt raising fees of £1m (2004:
nil).  Profit arising on the disposal of operations for the year to date was £2m
(2004: £6m loss).





Group - Cashflow and Net debt

                                 Third quarter                         Year to date
                                2005      2004       Change          2005        2004         Change

Free cashflow (£m)               (2)       (9)          n/a          (25)        (30)           +19%
Net debt (£m)                                                       (383)       (423)            +9%




Free cashflow for the third quarter was a little improved on the £9m outflow in
the comparable period last year.  As in prior years, the fourth quarter is
expected to generate strong free cashflows to give positive free cashflow for
the full year.  Free cashflow generated in the twelve months to 30 September
2005 was £57m.  Net debt at 30 September 2005 was £383m, £40m lower than 30
September 2004, reflecting the strong free cashflow over the last twelve months.




Outlook



Based on current trading conditions, expectations for the fourth quarter are as
follows:



As mentioned above, the Ceramics division experienced less of a market slow-down
in the third quarter than had previously been expected with a number of steel
production cutbacks likely to be deferred into the fourth quarter.  It is
therefore expected that fourth quarter trading will be weaker than that in the
third quarter but with growth returning in 2006.



In the Electronics division, the trends experienced to date are expected to
continue to the year end, with growth in Asia-Pacific offsetting previously
reported slowdowns in Europe and NAFTA.  Last year's fourth quarter results
benefited from the exceptionally high trading in high margin copper damascene
products which led to the overstocking issues reported for the first quarter
this year.  This is not anticipated to be repeated in the fourth quarter this
year.



The difficult trading environment experienced by the Precious Metals division
throughout 2005 is expected to continue to the year end.  Thus, while the fourth
quarter's trading is expected to show the normal seasonal improvement over the
previous three quarters, it is expected to be weaker than the same period last
year.



The Group continues to expect overall performance for the full year to be
slightly better than that achieved in 2004.




Notes:



(1)   All financial information is preliminary and unaudited. The results for
the Group for the three months period and the nine months period ended 30
September 2005 have been prepared in accordance with International Financial
Reporting Standards (IFRS) and the comparatives have been restated accordingly.

(2)   This announcement contains forward looking statements about Cookson.
Although the Company believes its expectations are based on reasonable
assumptions, any such statements may be influenced by factors that could cause
outcomes and results to be materially different from those predicted.  These
forward looking statements are subject to numerous risks and uncertainties that
could cause actual results to differ materially from those in such statements,
certain of which are beyond the control of Cookson.







A conference call for shareholders and analysts will be held today at 10:00am UK
time.  This can be accessed via a live audio webcast at www.cooksongroup.co.uk.


Shareholder/analyst enquiries:
Nick Salmon, Chief Executive                          [phone]
Mike Butterworth, Group Finance Director              [phone]
Isabel Vilela, Investor Relations Manager             [phone]

Media enquiries:
John Olsen, Hogarth Partnership                       [phone]





About Cookson Group plc


Cookson Group plc is a leading materials science company which provides
materials, processes and services to customers worldwide. The Group's operations
are formed into three divisions - Ceramics, Electronics and Precious Metals. The
Ceramics division is the world leader in the supply of advanced flow control and
refractory products and systems to the iron and steel industry and is also a
leading supplier of refractory lining materials for iron and steelmaking and
other industrial processes. The Electronics division is a leading manufacturer
and supplier of materials and services to the electronics industry, primarily
serving fabricators and assemblers of printed circuit boards, assemblers of
semiconductor packaging and the electrical and industrial markets. The Precious
Metals division is a leading supplier to the jewellery industry of fabricated
precious metals products.



Headquartered in London, Cookson employs some 16,000 people in more than 35
countries and sells its products in over 100 countries.


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